New Zealand remains the only country in the world with an ETS that allows unlimited forestry offsetting. Guy Trafford looks at the data for evidence of the spread of pine forests and the decline in livestock numbers

A recent article in the ODT “Rural Life” discusses the impact of forestry conversions from pasture to forestry. It comes as Beef + Lamb New Zealand report that sheep numbers have shown a slight increase on the previous going from 25.73 million last year to 25.78 million as of the end of June 2022. Given the number of farms sold for forestry conversions it may initially come as a surprise.

However, with the reduction of areas in drought last season there has been less pressure put on stocking rates and seemingly allowed more sheep to be carried through the balance day cut-off.

The other issue affecting numbers is the time lag between farm sales and land getting planted due to a lack of tree seedlings. Often the previous owner (or others) leases the land until seedlings are close to being in the ground.

Southland and Otago, which did have a dry season last summer and autumn, did show a sheep reduction with -3.9% and -1.7% respectively. Cattle numbers took a greater hit dropping -13.2% in Southland and a further -2.8% in Otago. The large Southland cattle drop no doubt having a large part to play with the -0.9% drop in cattle nationally.

Of particular interest was the results shown of the update of areas converted to forestry coming from the Overseas Investment Office (OIO). Earlier Beef + Lamb NZ had shown that in an independent report covering from January 1, 2017, to December 31, 2020, 139,500ha of land had gone to ‘forestry’ two-thirds, or 92,100ha was whole farm conversion to forestry, of which 14,300ha was manuka. One-third (47,400ha) was within farm forestry planting.

Since then, in 2021 another 16,340ha has been approved by the OIO for forestry conversion and by July 2022 an estimated total of 200,000ha has been targeted to go into forestry since June 2017.

The OIO has already approved 14,700 ha in the 6 months to July 2022 almost as much as in the whole of 2021.

In August 2022 the Government passed the 3rd reading of the Overseas Investment (Forestry) Amendment Bill. This Bill is supposed to provide more discretion to the OIO in turning down applications. Prior to this, overseas investments that result in conversion of land to production forestry could proceed through a simpler ‘special test relating to forestry activities’ (commonly known as the special forestry test) that provides little discretion to decision makers when they are assessing an investment. The new Bill requires overseas investments that result in conversion of land to production forestry to meet the ‘benefit to New Zealand’ test. The special forestry test has never applied to carbon forestry which must meet the Act’s more stringent test(s) and the Bill does not change this position.

The increase in OIO approvals earlier this year probably indicate investors are seeking to ‘beat’ the new ‘rules’ and perhaps a reflection of the growing interest of carbon forestry. A cynical person may wonder how many ‘production forests’ end up not being harvested, a concern of the Gisborne District Council. For those interested in looking further into the requirements those investing into forestry conversions the LINZ link and subsequent links will help fill the picture.

Getting back to stock numbers; it was expected that this amount of land area converted to trees would result in about 1.4 million stock units going. However, the reality. for now, is that the decline has (only) been -0.4 million since 2017 and most of that has occurred in the latter end of that period. This indicates the lag between land sales and livestock removal, as earlier mentioned, and it is expected livestock numbers will continue to decline post the slowdown or stopping of land conversions if that were ever likely to happen. So, the current lift in numbers in the case of sheep may only be a short lived aberration to the longer trend of numbers declining.

The Climate Change Commission estimated that 25,000ha per year would be required as a sustainable amount (along with other broader measures) of forestry conversions. Beef + Lamb NZ have estimated that in 2021 a total of over 37,000ha’s changed hands exceeding the 36,800ha of 2019. Hopefully the Agricultural minister's information is now more up to date than what he was quoting back in January so any Government response is made with the correct information. Beef + Lamb NZ are still calling for specific limits to be put on the amount of forestry that could be used to offset fossil fuel emissions. “New Zealand is the only country in the world with an ETS that allows unlimited forestry offsetting and both the Climate Change Commission and the Parliamentary Commissioner for the Environment have recommended that limits are needed.”